What is a balance transfer?

If you’ve ever felt stuck paying off credit card debt because of high-interest charges, a balance transfer could be the financial trick that helps you take control. But what exactly is a balance transfer, and how can it help you manage your money better? Let’s break it down in simple terms.

Understanding Balance Transfers

A balance transfer is when you move debt from one credit card to another—ideally to a card that offers a lower interest rate, or even 0% interest, for a set period. This gives you a chance to pay off your balance without worrying about extra interest piling up every month.

Think of it like moving your shopping from a broken-down trolley with a wobbly wheel (your current credit card with high interest) into a brand-new, smooth-rolling cart (a balance transfer card with a 0% deal). It makes the journey to being debt-free a lot easier!

How Does a Balance Transfer Work?

Let’s say you have £2,000 of debt on a credit card with an interest rate of 20%. If you only make the minimum payment, most of your money goes towards paying interest rather than reducing the actual debt.

Now, imagine you transfer that £2,000 to a balance transfer card with 0% interest for 24 months. That means for two whole years, every payment you make goes directly towards clearing your debt rather than paying interest. If you pay £100 a month, you’ll have completely paid it off before the interest kicks in!

Types of Balance Transfers

Balance transfers aren’t just for credit card debt. Here are a few different ways you can use them:

1. Credit Card to Credit Card – The most common type. You move your debt from a high-interest credit card to a new one offering a lower or 0% interest deal.

2. Personal Loan to Credit Card – Some balance transfer credit cards allow you to transfer a personal loan balance to take advantage of lower interest rates.

3. Overdraft to Credit Card – If you’re paying high fees on your overdraft, some credit cards let you transfer this balance and reduce your costs.

The Benefits of Balance Transfers

• Save Money on Interest – The biggest perk is the potential to save hundreds, even thousands, of pounds in interest.

• Pay Off Debt Faster – Since you’re not paying interest, every penny you put towards your balance actually reduces your debt.

• Simplify Your Finances – Instead of juggling multiple cards, you can consolidate your debt into one easy-to-manage payment.

Things to Watch Out For

• Transfer Fees – Many balance transfer cards charge a one-time fee (usually between 2% and 3.5% of the balance). Factor this in when deciding if it’s worth it.

• Time Limits – The 0% period doesn’t last forever. If you don’t pay off the debt before it ends, you’ll start paying interest again—sometimes at a very high rate.

• New Spending Temptation – If you keep spending on your old credit card after transferring the balance, you could end up in even more debt.

Who Should Use a Balance Transfer?

A balance transfer is great for:

• People with high-interest credit card debt who want to stop paying extra on interest.

• Those who can commit to repaying within the 0% interest period – this way, you avoid paying extra fees down the line.

• Anyone who wants to consolidate multiple debts into one payment for better financial organization.

However, it might not be the best choice if:

• You have a poor credit score – You might not qualify for the best deals.

• You tend to overspend – If you’re likely to rack up more debt, this won’t solve the problem.

• You can’t afford to clear the balance before the 0% period ends – You could end up paying high interest again.

Examples of Balance Transfer Credit Cards in the UK

Here are a few balance transfer credit cards that might work for you:

1. Barclaycard Platinum Balance Transfer Card

   • 0% Interest Period: Up to 32 months

   • Transfer Fee: 3.45%

   • APR: 24.9% variable

2. Tesco Bank Balance Transfer Credit Card

   • 0% Interest Period: Up to 30 months

   • Transfer Fee: 3.19%

   • APR: 24.9% variable

3. Santander Everyday Balance Transfer Credit Card

   • 0% Interest Period: Up to 29 months

   • Transfer Fee: 3.4%

   • APR: 21.9% variable

(For more details, check out comparison sites like MoneySuperMarket.)

Top Tips for Using a Balance Transfer Wisely

1. Know Your 0% Interest Period – Plan to pay off your debt before this period ends.

2. Calculate the Total Cost – Add up the transfer fee and check if the savings outweigh the costs.

3. Make a Repayment Plan – Divide the balance by the number of months in the 0% period to stay on track.

4. Avoid New Spending – Focus on paying off your debt, not adding to it!

A balance transfer can be a fantastic way to reduce interest payments and clear debt faster—if used correctly. But it’s not a magic fix. If you stay disciplined and have a clear repayment plan, it can be a powerful tool to help you get back on top of your finances and break free from high-interest debt.

If you think a balance transfer could work for you, do your research, compare offers, and make sure you have a strategy in place to make the most of it!

Avoid credit card interest with Curve Wallet 

With Curve, you can prevent paying credit card interest by using Go Back in Time®, a feature that lets you move past payments from a credit card to another credit card—up to 120 days after the transaction, depending on your Curve plan. This means you can shift purchases off your credit card before interest kicks in, giving you another month to pay off your balance without incurring interest. You can also use Curve ReFi feature to move multiple purchases from one card to another within seconds. Curve ReFi will group a number of transactions made from the last 12 months into one transfer amount, which you can move to a balance transfer credit card in seconds.